Editor Charles H. Smith's Note: An essay written for
an 1894 collection entitled The New Party Described By Some of Its
Members. Original pagination indicated within double brackets. To
link directly to this page, connect with: http://people.wku.edu/charles.smith/wallace/S507.htm

[[p.
177]] The science of Political Economy
has now guided, and often governed, the civilised world for near a century,
but it may be doubted if the world is much the better for its guidance.
We are, indeed, as nations, enormously richer than we were; but this is
clearly due for the most part to the growth of physical science. During
this century, steam power has developed from infancy to manhood, and has
supplied us with millions of slaves, more docile than the best trained
animals, more powerful than the giants and genii of Eastern fable. It
has been calculated that for every man now engaged in physical labour
there are the equivalent of ten steam men at work, and that by means of
labour-saving machinery we do fifty, or, perhaps, a hundred times as much
effective work per man as could be done a century ago. Now we know that
for many centuries before the invention of the steam-engine the men of
England supported themselves in rude plenty without any excessive labour,
although they had also to provide both necessaries and luxuries for a
vast body of idle nobles and fighting men, just as they do to-day. There
were, of course, periodical famines, but perhaps no worse or more frequent
on the average than those which, [[p. 178]]
despite all the resources of civilisation, still occur in Russia, India,
or Ireland.

In England, four
hundred or five hundred years ago, the ordinary work-day was eight hours,
and the labourer had abundance of such food and clothing and shelter as
at that time he felt the need of. According to the standard of living
at the time, he lived in comfort and in plenty, with time to spare for
rest and recreation. Can that be said of the whole body of our labourers
to-day?

Yet, if we had been
truly guided, if we had had a true political economy, when, in course
of time, we obtained the inestimable advantage of labour-saving machinery
equal in its effect to fifty times our whole working population, the entire
body of labourers should have had shorter hours of work, more abundance
of the necessaries of life, and a larger share of the comforts and enjoyments
required by our higher civilisation and our higher standard of living.
There is, however, ample evidence to show, not only that this is not
the case, but that, in proportion to the amount of wealth they produce,
labourers, as a whole, are far worse off than they were from two to five
centuries back; in other words, the contrasts of riches and poverty, the
gulf between rich and poor, is greater--far greater--than ever before
in the world's history.

Now, if political
economy has not caused, it has certainly done nothing to prevent, this
gross inequality in the distribution of wealth. It is for this reason
that everywhere, to-day, it is being denounced by [[p.
179]] thinking men as a false science--as a delusion and a snare--as
an ignis fatuus, leading men away from the paths of happiness
and true well-being, and guiding them towards the quagmires of unhealthy
competition, poverty, and discontent.

The important question
we have now to consider is, therefore, whether our legislators and our
social reformers are on the right track; whether they have been hitherto
conducting us along a road leading to general well-being, or in the very
opposite direction; whether our political and social arrangements are
calculated to produce, or have, in fact, produced, a reasonable amount
of happiness for the mass of the people; whether they are such as to render
it possible for all the inhabitants of our country to secure satisfaction
of the barest physical wants--good food, decent clothing, warm and healthy
dwellings, without which it is a mockery to expect that general intellectual
and moral elevation which alone constitutes true civilisation. In view
of the notorious fact that thousands, nay, millions of our people, cannot
obtain these elementary necessaries of a reasonably comfortable existence,
we ask, Do we not require a new science of Social Economy, in the place
of the old and altogether insufficient science of Political Economy?

Let us now, shortly,
consider the causes of this lamentable failure. How is it that a science
which has been so highly elaborated by so many able men, has yet led to
no adequate beneficial result?

The early writers
on the subject found a number [[p. 180]] of
erroneous ideas guiding countries and governments in their dealings with
each other. Money was looked upon as the chief form of wealth, and there
was a great dread of more money going out of a country than came into
it. The mutual benefit of trade between countries was not recognised;
and it was thought necessary to interfere by restrictive legislation,
in order to benefit ourselves and injure other nations as much as possible.
The price of food and other necessaries was believed to be determined
by the sellers. Hence, to prevent them from charging too much for their
wares, the selling price of many articles was fixed by law; and the same
was done with the rate of wages, and the rate of interest. The early Political
Economists saw that these, and many other interferences with trade, industry,
and commerce, were altogether unnecessary and injurious; and they endeavoured
to explain in a rigorously logical manner why they were injurious.
From doing this they were led on to investigate the nature and origin
of all the facts and phenomena of trade and commerce, of supply and demand,
of wages, interest, rent of land and profits, of money value and price;
why some things have great value but little price--as air and water, while
other things are very dear but have little real value--as gold and diamonds;
and these inquiries were found to be often so complex and difficult, that
there came to be a sort of fascination in them; and, just as mathematicians
find great intellectual pleasure in working out problems merely because
[[p. 181]] they are difficult, or because
they form part of a more extensive investigation of mathematical principles,
so eminent men devoted themselves, one after another, to working out,
in the greatest detail, all the problems of Political Economy. Hence a
science became established, built up step by step, corrected and improved
by successive writers, and, because it undoubtedly exposed many errors,
it was adopted by capitalists and legislators as an almost infallible
guide to the best and surest methods of increasing the "WEALTH OF NATIONS."

Now, it is not asserted
that there are any important errors in Political Economy as a science.
On the contrary, it is, no doubt, mainly true, and for our present purpose
I will admit it to be wholly true. I will admit, also, that it corrected
many errors of kings, governments, and merchants, and led them to a more
enlightened policy towards trade and commerce. So far as this went it
did good work; but this work was done long ago, and it has for some time
past produced nothing but evil, because it has been held to be what it
is not--a guide to the Well-being, as well as to the Wealth, of nations;
a science that would, if strictly followed, lead to the greatest happiness
of the whole community, as well as to the accumulation of enormous riches
by the successful few.

Political Economy
may be defined as the science which enables capitalists to secure the
maximum production of wealth. It does secure this result, but it also
(under existing social conditions) ensures that [[p.
182]] the wealth created by the labour of the many shall be enjoyed
by a comparative few. So long as the wealth is created, it takes no heed
who has the wealth.

Further, it altogether
ignores the social or moral results of this wealth accumulation, except
that it decidedly favours its use to produce more and more wealth. It
ignores altogether any rights of those who create all the wealth
to the greatest share, or even to any share, in the well-being and happiness
the wealth is capable of producing.

Again, it never
discusses any questions of right or wrong in social and political arrangements;
it recognises no such thing as JUSTICE, either in the acquisition, the
production, or the distribution of wealth; it never questions any social
or political arrangements, except those which are of a fiscal nature,
but takes them as it finds them, treats them as fundamental facts, and
then shows how, under existing conditions, the greatest quantity of wealth
may be created.

Coming to details,
it treats capitalists and labourers as necessarily distinct bodies, usually
summarised under the neutral terms, "capital" and "labour;" and it shows
how "labour" can be employed by "capital" to produce the maximum of wealth;
but it does not trouble itself about who gets the wealth, or whether either
capitalists or labourers are really benefited by the increased wealth
they produce.

On exactly the same
principles the Political Economy of the slave-holding states of North
America discussed [[p. 183]] the best methods
of treating the slave population, in order to produce the greatest amount
of wealth for their owners. The various questions of education, religion,
marriage, food, hours of labour, and punishments, were discussed from
this one point of view, just as, in the first half of this century, and
to some extent even to-day, the factory system, in its relation to the
"hands" and their children, was discussed from a similar point of view.
It has been boldly maintained before the recent Labour Commission, that
it is a good thing in itself for children--of course only for the children
of the poor--to get up at five in the morning to work in a factory, to
which they have often to walk a mile through rain or snow; the afternoon
being spent at school.

Political Economy--speaking
always of the science, not of the men who write upon it--is not disturbed
by the wider and ever-wider gulf that, with the increase of wealth, separates
rich and poor; by the increasing uncertainty of employment arising from
the massing together of vast bodies of labourers, wholly dependent on
capitalist employers for their daily bread; by the unnatural and unhealthy
lives of the poor so massed together in towns and cities; by the ever-increasing
waste of labour in the production of useless, trivial, or even hurtful
luxuries, which is an inevitable result of the increasing numbers of the
idle rich; by a system which causes much of the wealth created by the
labour of one generation to be employed in enabling many thousands of
the succeeding generation to live in [[p. 184]]
complete idleness, often resulting in vice, and even in crime.1

Surely a science
like this--so narrow in its scope, so powerless for good, so utterly divorced
from all considerations of morality, of justice, even of broad and enlightened
expediency--should be treated as a blind and impotent guide, which, if
any longer followed, will lead us on to social and political ruin.

It is the reaction
against the teachings of this narrow and unpractical science, and its
proved uselessness as a guide, that has led so many good and humane men
to advocate some form of Socialism as the only remedy for the evils which
seem inherent in our present social system. Socialism, as depicted by
its most able advocates, is very alluring; but whether or no it will be
an ultimate development of human society, there can, I think, be little
doubt that it will not, in our own country, constitute the next step in
human progress. The mass of men are not yet anywhere sufficiently educated,
either socially, intellectually, or morally. For some generations to come,
individualism will probably prevail, but ever more and more permeated
by mutual helpfulness, and systematised co-operation, till, in every class
of society, the well-being of all will be considered as essential to the
happiness of each individual.

Our great English
writer and friend of humanity, [[p. 185]]
John Stuart Mill, was profoundly impressed with the evils of our present
social system, though very doubtful whether any form of Socialism or Communism
would not be a remedy worse than the disease. He says--

"If the choice were to be made
between Communism, with all its chances, and the present state of society,
with all its suffering and injustices; if the institution of private property
necessarily carried with it as a consequence that the produce of labour
should be apportioned as we now see it, almost in an inverse ratio to
the labour--the largest portions to those who have never worked at all,
the next largest to those whose work is almost nominal, and so in a descending
scale, the remuneration dwindling as the work grows harder and more disagreeable,
until the more fatiguing and exhausting bodily labour cannot count with
certainty upon being able to earn even the necessaries of life--if
this or Communism were the alternative, all the difficulties, great or
small, of Communism would be but as dust in the balance."

Most of us will,
no doubt, agree with this powerful statement, but I believe there is an
alternative. Leaving out of consideration, therefore, for the present,
any question of Socialism, I shall endeavour to point out by what steps
we may attain to a system of SOCIAL ECONOMY which, while securing many
of the beneficial results of Socialism, will preserve all the advantages
of individual self-dependence and healthy rivalry, and will so educate
and develop social feelings, that if any advance in the direction of Socialism
is then desired, it will no longer be impracticable. We see, in the case
of the South American republics, that the freest political institutions
work nothing but evil when men are unfitted for them; and the constant
revolutions and [[p. 186]] wars, bloodshed
and oppression, in those ill-governed countries, should warn us against
attempting forcibly to establish any system of social organisation for
which the masses, whether of the rich or the poor, are not yet fitted.

In seeking for the
foundation of a true Social Economy, which shall secure to labour its
just reward, and enable every man who will labour to obtain all the necessaries
and comforts, and many of the luxuries of life, I find it in the great
principle of Justice and of the Equality of Opportunities
for all adult members of society. It seems to me self-evident that any
fundamental injustice or inequality in the opportunity to gain a livelihood
cannot lead to good results, and cannot be the permanent condition of
society.

Guided by these
principles, let us endeavour to discover the causes of the present unequal
distribution of wealth, and the consequent absence of general well-being
and contentment.

It is a fundamental
fact that all wealth is the result of labour intelligently applied to
natural products or aided by natural forces, or, as comprising all these--to
land. Labour, Land, and Intelligence combined are, therefore, the sources
of all wealth.

Capital is usually
claimed as one of the factors of wealth-production, but this is to obscure
the issue. Capital is itself wealth--is itself the result of labour and
intelligence applied to land--is, therefore, only a secondary, not a primary,
source of wealth. Of its uses and dangers we will speak presently.

[[p.
187]] Now, as wealth can only be produced
by means of Land, on which to exert Labour and Intelligence, and as no
man can exist without the use or consumption of some portion of wealth,
it necessarily follows that, unless he has the opportunity or the privilege
to use some portion of land, or to obtain some of the products of land,
he is denied the right to exist. Hence, equality of opportunities implies
the right or privilege of all men to a share in the use of land; and as,
when the land of a country all becomes private property, this right cannot
exist, therefore private property in land is condemned as a fundamental
injustice--as a denial of equal opportunities, privileges, or rights.

I will not now pursue
this particular question further, but, in the light of the principles
asserted, will endeavour to show the causes of existing Social Inequalities.

One of the more
immediate and remediable causes of these inequalities is, that labourers
are dependent on capitalists for employment--for the very power of doing
any productive work, by which alone they can obtain food and other necessaries.
They have usually no means of support but wage-earning; when this fails
they are destitute and helpless. They are not, therefore, in the position
of freemen, since they are dependent on others for the permission to labour--for
the opportunity to earn even a bare subsistence.

Now, in order to
remedy this evil, in order to make the labourer really a free man, he
must be placed in a position to work, either alone or in association with
[[p. 188]] his family or his fellow-labourers,
without the necessity of waiting till some capitalist has need of him.

To ensure this,
he must, in the first place, have a sufficiency of land attached to his
dwelling from which he may directly obtain the bare food to support life
when his usual work fails, and may also have a permanent home from which
he cannot be driven at the will of any other man. He must also have some
home industry to employ profitably the spare time, or the hours which
would otherwise be wasted, of himself and his family. Lastly, he should
have his regular trade or employment, which he should exercise either
on his own account or in co-operative association with other workmen,
not as the hired wage-thrall of a master capitalist.

This, of course,
implies that men must no longer live crowded together in great cities,
where the labourer is altogether removed from contact with productive
nature, and is helplessly dependent on the capitalist for permission to
labour, and, therefore, for permission to live. The many evils of great
cities have been pointed out by the moralist and by the social and sanitary
reformer, but they have been looked upon as necessary products of civilisation--as
the results of a tendency in human nature--as needful for economy of production
and of distribution. Looked at from the standpoint of the capitalist and
the speculator, this is true. Great cities give them an unlimited command
over labour, and the greatest facilities for gathering into their own
pockets the wealth which other men [[p. 189]]
create; but to the very same extent they are a curse to the labourer,
who necessarily loses what the others gain.

Even on the question
of economy of production due to huge factories and minute division of
labour, there is much to be said on the other side. For here, again, the
economy is all for the capitalist, the waste and loss for the labourer.
The individual capitalist discharges a hundred or even a thousand men
when he no longer wants them, or works short time, or lowers wages--all
economical for him, but a terrible loss for the thousands or ten-thousands
of workmen, who are thereby rendered compulsorily idle! I prefer the economy
which gives the labourers constant work, even if the capitalist gets rich
less rapidly, or even not at all.

Again, the many
factories concentrated in great cities require an army of men to be engaged
in the distribution of their products; and every hand these products pass
through takes a profit out of them--all causing a loss to the great body
of workers, first, in the diminished wages they receive, owing to the
competition of dependent labourers, next, in the higher price they have
to pay the retail trader for the goods they themselves have made.

But if population
were more uniformly distributed over the surface of the country, with
multitudes of small industries and small factories belonging to associated
workmen, then a large portion of this army of middle-men distributors
and speculators would not be required, the producer and the consumer would
usually [[p. 190]] deal together at first
hand, and this great saving might entirely balance the saving by production
on a larger scale.

The common argument
against any suggestions of this kind is that it is a step backwards, that
it is impossible to return to hand-labour and small industries; and we
have the usual comparisons of the old hand-loom and the modern power-loom,
of the old spinning-wheel and the modern spinning-mule. But this is simply
throwing dust in our eyes, and is entirely beside the question. All the
resources of invention and improvement for more than a century, all the
marvellous discoveries of science, have hitherto been utilised in the
interest of the capitalist alone, not in that of the workman. They have
all been applied to machinery adapted for use in huge factories, because
it was the capitalist who required them, and it was his interest to get
his profits on the largest possible scale. But directly there is a demand
by small manufacturers and by single workmen, science and invention and
mechanical art will work for them, and will provide machinery adapted
for small associated workers and for cottage industries, just as it has
provided the beautiful sewing-machines and knitting-frames and type-writers
for use in the smallest dwelling.

In like manner,
so soon as there is a demand for it, there will be no difficulty in supplying
mechanical power to work these machines as easily as water or gas are
supplied now, either by compressed air, or water, or by electricity, so
that every workman may be [[p. 191]] able
to start his machine at a moment's notice, and pay only for the power
he actually uses. Under this system he might carry on at once an out-door
and an in-door trade, employing profitably much of the time now wasted
by bad weather, by long winter nights, by weary tramping to and from the
factory; and at the same time obtaining health and vigour by the change
of labour, by the freedom of his life, and, above all, by the invigorating
fact that he was his own capitalist and his own master, and that the whole
value of what his labour produced went into his own pocket.

Here, again, are
many distinct sources of economy. We have human labour saved,
wasted time utilised, health improved, and happiness
increased--a true MORAL and SOCIAL ECONOMY which, when once it is fairly
tried, will be found far to outbalance the mechanical economy derived
from making thousands of men and women the mere slaves and adjuncts of
machinery, under conditions involving monotony, disease, and discontent.
Just as surely as free wage-labour has always been found to be superior
to slave-labour, so surely will it be found that the independent self-employing
worker will far surpass in efficiency him who works only for fixed daily
wages paid him by a master.

The next great source
of remediable inequality arises from the way money can be and is manipulated,
so as to enable ever-increasing numbers of men to live in idleness, supported
by the labour of those who work. This result is so often denied that it
may be necessary [[p. 192]] to explain and
illustrate the fact. It is continually asserted that men who possess money,
and spend it, do good to the community by employing labour; while it is
often urged that the poor or the workers could not get on without such
men. It is, therefore, necessary to go to first principles.

Let us suppose an
island, cut off from the rest of the world, but which produces all the
food, clothing, and luxuries necessary for a happy existence. Let us suppose
the inhabitants to be all workers, all having the use of such portions
of the land as they require, for which they pay a rental to the State,
which suffices in lieu of all taxation. They use gold and silver money
to facilitate exchange among themselves, just as we do. Now let one of
these men discover a hidden treasure of fabulous amount. He keeps it secret,
but leaves off work, and henceforth is able to buy everything he wants.
Let a hundred men each find a similar treasure, and follow his example.
Are the people of the island any richer for this treasure spent among
them? Are they not, on the contrary, poorer, since the hundred men who
before worked are now idle, and all that they eat and drink and consume
has to be provided by the labour of the rest?

This illustration
serves to show that when rich gold and silver mines are discovered in
a country and are largely worked, the result is a positive injury to the
general population; for all useful and necessary articles become dearer
owing to the metals by which their value is estimated becoming more abundant;
while the [[p. 193]] number of labourers in
some other occupations being proportionately diminished, causes an independent
rise in price of some products. The enormous production of gold and silver
in Australia and North America during the last forty years has certainly
been one of the contributory causes of the widespread poverty and hardship
that continues to prevail in England and the United States.

But let us suppose
another case. There are many streams on the island, some large and some
small, from which all the inhabitants get water; but many of the smaller
streams rise in springs on private farms or gardens, and flow through
them to the sea; and, as there was plenty of other water, these small
streams were recognised as belonging to the occupier of the land for the
time being. Now, there came an earthquake which disturbed the strata,
and stopped the flow of one of the larger brooks, and people had to go
a long way for water, unless they could use the small streams flowing
wholly through private grounds. For the use of these streams the owners
demanded a toll, and obtained it. Then other brooks dried up, and the
need for water became greater, and all who had streams in their private
grounds increased the toll; and then they laid on the water in pipes,
and charged highly for it, and gained enormous wealth, which they spent
profusely. They hired numerous men and women to be their servants, and
others to make costly clothes and ornaments, and jewels, and to attend
to their horses and dogs, their carriages and yachts; till at last half
[[p. 194]] the population of the island were
employed in providing luxuries and pleasures for the few water-owners,
and the other half of the population had to work twice as hard as before
to obtain the necessaries of life for the whole population, and to pay
the heavy water-rates. Now, this is exactly a parallel case to that of
the ownership of land, especially in great cities, where the landlords'
wealth ever increases as the growing population has ever greater need
for this first necessary of existence, but whose increased wealth is due
to the tax (called rent) they are enabled to levy on the rest of the community.

Surely these cases
show us that the more idle and luxurious rich there are in a country--the
more money is spent in display, and fashion, and reckless extravagance--the
worse off the working-people of that country must become. Sophistry
may disguise it among the complex workings of modern civilisation, but
whenever the case is reduced to its simplest elements--as I have endeavoured
to reduce it in the illustrations just given--we see that wealth and poverty
are strictly co-relative, and that whenever the first increases greatly
in the hands of individuals, the poor must also increase, either in their
numbers or in the average intensity of their poverty. These illustrations
have also brought out very clearly--what all the best economic writers
admit--that money, whether gold, silver, or paper, is not wealth, but
only an instrument for facilitating the exchange of wealth; and we will
now consider the abuse of money, by which men who produce [[p.
195]] nothing, and do no useful work, are yet enabled to acquire
great wealth, and to keep their descendants for several generations living
in idleness.

True wealth or capital
consists of useful products of every kind, and is eminently perishable.
The primary necessary, food--forming, perhaps, at any moment half the
real wealth of a country--lasts only a few days or months; another large
portion, clothing, lasts but a few years, and then perishes; dwellings,
furniture, and machinery last longer, but require continual repairs or
they soon cease to be serviceable; even our most solid forms of wealth--roads,
bridges, canals and railroads--also need repairs, and often require to
be altered or reconstructed to meet new wants or changing conditions.
Now these things, and such as these, comprise all real wealth, and we
see that they are all either perishable or require constant supervision
and repair or alteration, to keep them in serviceable condition. Hence,
a man who had produced or had acquired such wealth as this, could not
derive an income from it without continuing to bestow on it some care
and labour. He could not safely live in idleness and expect his property
to retain its value, still less could he secure from it a perpetual income
on which his heirs for many generations could securely live in idleness.
But money enables him to do this, and more than this: it enables him often
to increase his wealth two-fold, or ten-fold, or even a hundred-fold,
without doing any service to his fellows, or anything to increase the
useful or real wealth of the community.

[[p.
196]] Why is this possible? Surely
there must be something wrong when the mere instrument of exchange takes
the place of real wealth--becomes enduring instead of perishable--produces
a certain and perpetual income without labour, whereas the true wealth
which it represents could only at best produce an uncertain income by
means of continuous attention and some cost of labour.

This is a vital
question for all real workers--those who by their labour produce the wealth
of the community--because the present system leads to a continual increase
of those who are able to live in idleness on invested capital, producing,
apparently, perpetual incomes; and their increase necessarily makes the
workers poorer than they otherwise would be. Just consider for a moment.
Every year surplus wealth is created, passing usually into the hands of
rich men; and if any portion of this surplus wealth can be safely invested
to produce a permanent income, then the number of those who can and do
live upon such incomes year by year increases. Now, as there is no other
source of wealth in a country than the labour and intelligence of the
workers applied to land or its products, the larger the share of that
wealth which can be obtained by idlers living on invested money, the smaller
will be the share left for those who produce the wealth. It is, therefore,
of vital importance to the workers to find out the source of this great
evil, this power of accumulated wealth--in its real nature perishable--to
take away from them an ever larger and [[p. 197]]
larger share of the fresh wealth which they daily and yearly create.

This is a question
which is not discussed in works on Political Economy or Finance, since
the unlimited increase of the wealth of capitalists is considered to be
an unmixed blessing. We must, therefore, study the problem for ourselves,
and we shall find its solution in the widespread system of CREDIT, on
which modern commerce, and social improvements, and government institutions
are alike made to rest, and which is as the very breath of its nostrils
to modern capitalism. It is this gigantic system of credit--or more properly
of indebtedness--which furnishes the numerous opportunities for investment
by means of which realised wealth is able to prey perpetually upon labour.
It is this, also, which affords the opportunity for gigantic and reckless
speculation, by which a few capitalists and financiers make great fortunes,
while many suffer loss, and the whole nation is proportionately impoverished.

Whether it is Government
debts for war purposes; or railroad, canal, or water-company bonds; or
State or municipal loans for public improvements, the system of borrowing
money on interest is both unnecessary and injurious. If the purpose for
which the money is required be an honest, useful, and remunerative purpose,
then, as may be easily shown, a loan is unnecessary. If it is required
for a dishonest purpose, if it is worked by financiers and speculators
for purposes of individual profit and plunder, then a loan is doubly injurious,
inasmuch as it offers opportunities [[p. 198]]
for dishonesty, while it permanently impoverishes the mass of the people,
who are taxed to pay the interest. I have said that in the case of a genuine,
useful, and remunerative public work any loan is unnecessary, and I will
now explain this by means of an actual example.

In the island of
Guernsey some years ago a market-place was much wanted, and the Government
of the island having determined to build it, issued notes, inscribed "Guernsey
Market Notes," for £1 each, and numbered from one to four thousand, £4000
being the estimated cost of the market. With these notes the Government
paid the contractor, the contractor paid his men, and the men bought all
the necessaries they required, as the notes were a legal tender in the
island. They were used to pay rent, to pay taxes, and for all other purposes.
When the market was finished, it immediately produced a revenue, and this
revenue was applied to redeem the notes; and in ten years all were redeemed,
and henceforth to the present time the market returns a considerable revenue
to the Government of the island, which goes to reduce taxation; and all
this was done without borrowing any money or paying any interest.

Now here is a principle,
applied on a small scale by a small self-governing community, which is
capable of a very extensive application. All remunerative public works
could be executed by some such method; while if it is urged that some
works, like sanitary improvements, are not directly remunerative, it may
be replied that this is usually because the benefit of such works [[p.
199]] is allowed to be absorbed by individuals instead of accruing
to the community. This is because individuals possess the land in our
towns and cities, and every sanitary improvement effected at the public
expense increases the value of this land. In fact, no public improvement
of any kind can be made in a city without increasing the value of the
land, so that there is a double motive in urging on costly, and, perhaps,
unnecessary, improvements--jobs are effected by financiers and contractors,
while the owners of land know that, however much the ratepayers may suffer,
they are sure to be benefited. Here is surely another indication
that the land of every municipality, or other local community, which grows
in value owing to the increase and the expenditure of the whole population,
should belong to the community and not to private individuals.

The subject, however,
which we were more particularly considering was the doing away with those
funds and investments by which money is made to produce a perpetual income.
Now, when, as in Guernsey, there was no permanent debt created and no
interest paid, there was no "stock" to speculate in and no income derivable
from it. Here, then, we have a double advantage over the usual mode of
creating interest-bearing debts, which indicates that we have discovered
an important principle, which is applicable to almost every case of public
improvement. Let us take the case of railways, for example. These are
usually constructed under legislative acts, empowering a company [[p.
200]] to take the necessary land to build the line and to work
it for the profit of the shareholders. This plan has led to the greatest
possible amount of mischief. Lines have been made where not wanted; speculation
to an enormous extent has been encouraged; huge monopolies have been created;
shareholders by thousands have been ruined; while the last thing considered
has been the general interest. During the last great American railway
mania it has been estimated by Mr. Atkinson that railway-construction
went on four times as fast as the increase of produce to be carried by
the railways, thousands of miles of railway being made long before they
would be wanted, involving loss in a great variety of ways, and being,
in fact, one of the causes of recurring depression of trade.

If, on the other
hand, no such power had been given to companies, but, when public opinion
in any State or country demanded a particular line of railway, it had
been constructed by means of Railway Bonds created for the purpose,
bearing no interest, and serving as legal currency within the State till
they were all redeemed and paid off out of the profits of the line, then
no speculation would have been possible. It would have been no one's interest
to build unnecessary and unprofitable lines, because so soon as this was
done the bonds of the particular line would have little chance of being
redeemed; and as they would be a legal tender, they would soon be all
paid in as taxes, and the Government--that is, all the taxpayers--would
have to bear the loss. This would check further railway- [[p.
201]] making for a time, and thus prevent useless expenditure in
the interest of speculators and contractors.

On the other hand,
every railway that returned any profits at all would steadily redeem its
bonds, and then the whole of the future profits would go to reduce taxation
or to make railway travelling free. It would thus be the interest of every
one that no railways should be made that were likely to be worked at a
loss, because that would lead to a depreciation of the bonds, and thus
be a loss to the whole community. But it would be equally every one's
interest that all really useful and necessary lines should be made, because,
besides the direct benefit, the bonds would be quickly redeemed and the
profits of the line would enable the general taxation to be reduced. Water-works,
gas-works, public parks, new streets, and all similar improvements could
be executed on a similar principle, the only safeguard required being
that no large improvement should be undertaken in any town or district
till the preceding one had been completed and had begun to redeem its
bonds out of its genuine profits or proceeds.

It has now, I think,
been made clear how all public works and public improvements may be effected
by public credit, properly so called, instead of by public debt,
involving far less risk of loss, no permanent charge on the community,
but leading, on the contrary, to a continuous reduction of taxation, and
cutting away the very foundations of the system by which the financier
and speculator are now enabled to plunder the working people.

[[p.
202]] Turning now to another branch
of the same subject--the great system of private indebtedness and trade
credit, which leads to so much ruin and misery, so much fraud and robbery,
whether by means of bogus companies, wild speculation, or fraudulent bankruptcy,
it seems probable that this may be best dealt with by simply disestablishing
it, that is, taking away from it the protection of the law. Many eminent
men, including some great lawyers and even judges, believe that it would
be well for society if the State recognised no debts, except for work
done or goods supplied to be paid for on delivery. Everything in the shape
of loans or advances without security, or goods supplied on credit, should
be made at the lender's or seller's risk--should be really debts of honour,
not recoverable by any legal process. It would, in every case, be a question
of personal credit and trust. Character thoroughly established would be
essential to obtain credit or a loan, and thus, both reckless trading
and fraudulent bankruptcy would become impossible.

Limited-liability
in trading associations should be abolished. True old-fashioned partnerships,
in which the partners are associated by mutual knowledge and similar interests,
would take the place of "companies," in which some of the partners or
promoters are mainly interested in robbing the rest; and with the abolition
of these "companies" would be removed a gigantic means of speculation
and fraud, which, as we have seen, not only injures individuals, but indirectly
plunders the whole industrial community.

[[p.
203]] We have now briefly discussed
the two great principles of true Social Economy, by which, if carried
into action, Labour would be entirely released from the tyranny of Capital,
and, for the first time in history, receive its full and just reward.
Socialists believe that this can only be effected by the whole capital
of the country becoming the property of the State, and by all industries
being worked by the State. This, however, is a question of the future.
What is here proposed is an immediate and practicable first step, which
would gradually extinguish capitalists as a separate class--first, by
enabling every worker to become his own capitalist, either singly or in
association with his fellow-workmen; secondly, by abolishing that system
of universal indebtedness which affords the machinery for boundless speculation,
and enables money to breed money--a thing which the great Greek philosopher,
Aristotle, condemned as the most justly hated and the most unnatural.
Just in proportion as these methods were brought into operation great
capitalists would find their position more and more untenable. By the
diminution of public debts and those of great companies the means of speculation
and permanent investment would diminish, and ultimately cease; while,
on the other hand, the growing independence of workers, becoming their
own capitalists and their own employers, would steadily diminish the supply
of wage-labour and as steadily raise the rate of wages of those who continued
to work for employers.

Then would be seen
a most marvellous and beneficial [[p. 204]]
change in the relations of capital and labour. Instead of labourers everywhere
seeking work, and usually being obliged to accept employment on the capitalist's
terms, we should see capitalists and employers everywhere competing for
a supply of labour, and offering high wages, short hours, and a share
in the profits, in order to secure it. Capitalists who were not manufacturers
would be everywhere seeking investments, and would beg to be allowed to
furnish associated labourers with capital, receiving instead of interest
a small share of the profits.

It will perhaps
be said, this is a very fine picture, but how is it to be all done without
a revolution? Let us endeavour to answer this question in a few words.

The workers are
everywhere in a majority; and in America, England, and many other countries,
they have now the power in their hands (if they will but unite) to effect
any political and social changes they think advisable; and if they take
care to work only on the lines of justice and equality of opportunities,
they will receive the earnest support of many of the best writers and
thinkers of the age.

The first thing
to be done is to obtain the land around all cities, towns, and villages.
This may be effected by a law giving to every community, large or small,
the power to take any land now used for agricultural purposes at agricultural
value, such land to be let out to any of the citizens who need it for
personal occupation, on a secure tenure, subject to increase of [[p.
205]] rent when, by growth of the community or other public cause,
the value of the ground rents increase. This would at once check the rapid
increase of land values in towns, which is in large part the result of
monopoly, and afford that secure footing for the labourer which is the
first essential to his progress. To prevent the further appropriation
by individuals of land-values created by the community, all ground-rents
should be valued at moderate rates, and the owners granted terminable
annuities for the amount; either for a limited number of years, or for
the life of the present owner and his next living heir; so that all further
increase of land-values in cities and towns would accrue to the municipality.
This would secure the "unearned increment" of land-values to the community
which creates them, on the principle advocated by John Stuart Mill, and
would effectually stop further land-speculation.

In the matter of
public and private indebtedness the first step will be to return representatives
who will see that all public reproductive works are carried out by means
of special bonds to be redeemed out of the profits arising from the undertaking.
When by these means, and by the revenues arising from the increased values
of building lands, State and Municipal taxation is diminished, and the
State credit increased, the railways, &c., may be successively taken
and the shareholders dealt with in the same manner as has been proposed
in the case of the landlords. In this way all the great public works,
which ought never to have been [[p. 206]]
allowed to become private property, may be acquired, one by one, by the
community, without the need of any interest-bearing loans; and thus one
great means by which so many men are enabled to live by speculation--that
is, really on the labour of other men--will be abolished.2

The inevitable result
of these changes will be that rents will fall, the rate of interest will
fall, taxation will diminish, and wages will rise. By means of these several
advantages workmen who wish to work for themselves will soon be able to
save the small capital necessary to do so; while those who wish to work
in associative co-operation, after saving half the capital required, will
probably be able to get the other half free of interest, on the security
of a small share in the profits.

Of course, any such
proposals as these will be violently opposed by capitalists and their
friends. They will tell us that it will bring about the ruin of the country--meaning
the diminution of their wealth and power. But such opposition is to be
expected, for even Adam Smith, the father of Political Economy, tells
us that, "The interest of capitalists is always in some respects different
from, and opposite to, that of the public." And Ricardo, the second great
leader of the Political Economists, assures us that, "There is no gain
to society at large from the rise of rent; it is advantageous to the landlords
alone, and their [[p. 207]] interests are
thus permanently in opposition to those of all other classes."

As to the objection
that the raising of our working classes to a condition of general comfort
and well-being would involve the loss of much of our foreign trade, it
is the merest bugbear that ever was put forward in the interests of the
wealthy classes. There are two amply sufficient answers to this objection.
The first is, that with all our workers in a condition to command
the necessaries and comforts of life, home consumption would increase
so enormously that foreign trade would be of comparatively small importance.
As an indication of what this increased consumption is likely to be, we
may recall the fact that we now import a hundred and fifty millions worth
of foods, all products of this country, and all capable of being produced
in the country when our land is thoroughly cultivated by men who reap
the harvest for themselves. If only half of this amount were produced,
the money being almost all spent on home manufactures would to that extent
replace foreign trade; and if to this we add, say forty, or even twenty,
pounds a year increased income to each of our ten million workers, we
shall arrive at a total of increased consumption that would go far to
render a large foreign trade altogether unnecessary.

But, quite independent
of this enormous increase of home consumption, there is another answer
to the objection, which ought to be still more conclusive to the objectors,
because it is the answer of Political [[p. 208]]
Economy itself. Yet our political writers and our legislators are either
ignorant or conveniently forgetful of this, when they urge that the adoption
of a general eight hours' day, or a general rise of wages, would render
it impossible for us to compete with other countries for foreign trade,
and try to persuade the workers that any such change would in the end
be ruinous to themselves. But in Mill's "Principles of Political Economy"
this very question is argued at great length and with marvellous cogency,
and his results are held to be indisputable and form an essential part
of the modern science of Political Economy. First, in Book III., chap.
iv., he shows that wages are not an element of value, except in so far
as they vary from one employment to another. In chap. xvii. of the same
book he shows that cost of production does not regulate international
values, the profitable interchange of commodities between different countries
being determined, not by their absolute, but by their comparative,
cost of production. Then, further on, in chap. xxv., he discusses the
effect of wages on the competition of countries in foreign markets, and
states, as a general conclusion: "General low wages never caused any country
to undersell its rivals, nor did general high wages ever hinder it from
doing so." If any one will carefully study the chapters which lead up
to this conclusion, he will be forced to admit that it is correct, and
it is, in fact, one of the acknowledged results of that science to which
the capitalist and the legislator continually appeal when it serves their
[[p. 209]] purpose. But in all the discussions
for many years past as to shorter hours or a general rise in wages, I
have never seen a single reference to it, either in the press or in Parliament;
but, on the contrary, the exploded bugbear of "loss of foreign trade"
has been, and still is, perpetually put forward, and, in their ignorance,
accepted by many of the workers, as if it were a truth of Political
Economy, instead of being its very opposite!

Let us now briefly
summarise the methods by which the horrible inequality in the distribution
of the wealth which is annually created by the working portion of the
community can be remedied; and to such as may think my proposals too radical
I commend the dictum of J. S. Mill, to the effect that, when gigantic
evils are to be remedied, small measures and petty palliatives are useless,
for such measures do not produce even a small effect; they usually produce
none at all, or even increase the evil. I propose, then, as alone adequate
to grapple with the evil:--

1. That the land
must be devoted to the use of all on equal terms, and especially to those
who are willing themselves to cultivate it. By doing this we shall bring
about a more equable distribution of the population, a maximum of production
from the soil, and a far closer relation between producer and consumer.
This will be true economy, and will most certainly conduce to morality,
to health, and to happiness.

2. We must also
aim at abolishing the relations [[p. 210]]
of capitalist and labourer, of master and workman, by insuring that each
labourer may himself become a capitalist; that in all small industries
the employer and employed--the maker and the consumer--shall deal directly
with each other; while manufacture on a larger scale may be effected by
numerous associations of workmen utilising their own capital and labour.

3. And, lastly,
we must check individual indebtedness as a means of carrying on business,
and cease to enforce the payment of unsecured debts; while we must gradually
get rid of all the funded debts of kingdoms, states, cities, and companies,
because they inevitably lead to hurtful speculation, to the growth of
millionaires, and the plunder of the public.

If some such fundamental
remedies as those now suggested are not adopted, or at least fully and
freely discussed with a view to their speedy adoption, the perennial struggle
between capital and labour will continue with ever-increasing intensity,
and the far more drastic proposals of Socialists and Communists, involving
perhaps immediate confiscation of property and widespread ruin of individuals,
will certainly gain increased support, and may ultimately be forced upon
the legislature by the united power of labour organisations and social
reformers.

But to avoid this
danger, no petty palliatives, no extension of the sphere of charity, will
suffice; and I claim for my proposals the character of true conservative
reform, inasmuch as they are calculated to bring about [[p.
211]] a more equable distribution of wealth and of well-being with
a minimum of social disturbance, and by methods which are strictly equitable,
and are founded on the great principle of the EQUALITY of RIGHTS and OPPORTUNITIES
for all the citizens of a free community.

Notes Appearing in the Original
Work

1. It is not asserted that all Political Economists
have ignored these questions, but merely that they do not come within
the sphere of Political Economy as a science. [[on
p. 184]]

2. The method of carrying out these reforms
has been more fully explained in the writer's article on "Economic and
Social Justice," in Vox Clamantium. [[on
p. 206]]

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